Finra fines and suspends Wells Fargo adviser who lost job over cyberattack

She transferred $350,000 from a client's account to an imposter in phishing scam without following firm's verification process

Oct 7, 2016 @ 12:06 pm

By Bruce Kelly

A former broker for Wells Fargo Advisors Financial Network who was the target last year of a cyber-attack that sucked $350,000 from a client's account was fined and suspended this week by the Financial Industry Regulatory Authority Inc.

The adviser, Kathleen Kincade, was fired from Wells Fargo in January over the cyberattack and is not currently registered with a broker-dealer. Finra fined Ms. Kincade $5,000 and suspended her for 30 days, according to the regulator's settlement order.

Ms. Kincade apparently fell prey to a type of phishing scam that hackers use when targeting financial advisers; the fraudster hacks into a client's email, poses as the client in email exchanges with the adviser and then requests an electronic transfer of cash to an outside account, often overseas.

Firms typically have rules that require the adviser speak to the client and verify the request before making the transfer. And that's where Ms. Kincade fell short, according to the Finra settlement.

Last October, Ms. Kincade “improperly caused two domestic wire disbursement totaling $349,947.53 to be effected from the account of firm customer WB to bank accounts held by third parties,” according to the order. “Kincade processed the wires based on e-mailed instructions that she received from an imposter who hacked customer WB's email account. In each instance, Kincade falsely represented in the firm's internal systems that she had verbally confirmed the wire disbursement instructions with WB, which was not true.”

A series of three wire transfers were made in the matter; after it learned they were fraudulent, Wells Fargo was able to reverse one transfer. It then reimbursed the client for the other withdrawals.

Wells Fargo requires advisers to complete various steps in processing such wire transfers, according to the settlement. For wire transfers of $10,000 or more, advisers are required to verbally confirm the customer's identity and the terms of the request and to document the verbal confirmation, according to the settlement.

Ms. Kincade could not be reached for comment. A Wells Fargo spokesperson, Emily Acquisto, did not return a call on Friday to comment.

(See: Steps advisers must take to avoid email cyber attacks )


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